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Private health insurance set for shake-up

Australians with private health insurance are being promised cheaper premiums and easier access to mental healthcare under a raft of new measures.

Federal Health Minister Greg Hunt will on Friday announce a major shake-up of the system, with those under 30 expected to be the biggest beneficiaries.

They will be offered a two per cent discount every year up to a maximum of 10 per cent, which they will keep until they are 40.

Mr Hunt believes this will encourage young people to take up private health insurance while helping other policyholders.

"The more young people you have in the system, the lower the average cost of premiums for everybody," he told ABC TV.

Prime Minister Malcolm Turnbull says the package of measures will benefit all Australians and make comparing policies easier.

"It'll be simpler," he told Seven Network.

People will get the option to increase their excess - $750 for singles and $1500 for families - in exchange for lower premiums.

The government will also take alternative therapies like homeopathy, reflexology as well as yoga off the list of items covered, while the waiting period for mental health services will be scrapped.

"So people will be able to access mental health services earlier through private health insurance," Mr Turnbull said.

"It is critically important."

A cut to the price insurers must pay for some medical devices is also expected to drive a reduction in the size of premium rises.

Mr Hunt says an agreement with makers of hip and knee prostheses and cardiac devices will save insurers about $1 billion over the next four years.

"And that will go straight through to reduce premiums," he said.

Premiums have increased an average of 5.6 per cent a year since 2010, but Mr Hunt wouldn't put a figure on how much that will fall.

"I'm working with the private health insurers ... and they have guaranteed in writing they will pass through all of the cost savings."

Insurers will have to re-categorise policies as either gold, silver, bronze or basic packages and provide a one-page summary to ensure "no surprises".

"That means people will have clear choices and clear explanations in a way that has never been the case," Mr Hunt said.

He claims it's the biggest private health insurance reform in 15 years and is just the first round.

Labor's health spokeswoman Catherine King said young people will only save about 70 cents a week while older Australians won't see a dollar returned to their back pocket.

"It's clear from this package that the Turnbull government only cares about getting as many people as possible to sign up for private health insurance - it doesn't care about what happens when they try to use it," she said in a statement.

Labor, however, welcomes the cut to the cost of devices on the prostheses list.

Australian Medical Association president Michael Gannon says the move won't solve the issue of affordability, but it is a step in the right direction.

"The biggest problem in the affordability of private health insurance is the amount that's going into the pockets of the for-profit insurers," he told ABC radio.

"We need serious reform which addresses the simple fact that (healthcare) costs will continue to increase year on year."